40. Four Pillars Of Success Trading the Markets


There are 4 pillars of success when trading:

  1. Trend - It is important to know what the trend is to trade more often in that direction. We use many trade models and Alpha Indicator models to determine trend. The simple tools are cycles of long-term charts. We have learned to day trade long-term charts and enter and exit using short-term charts.
  2. Fill Price - It is also very important to get a good fill price to set up Pillar #3, your exit price. We found no one can buy the bottom tick or sell the top tick, so why try?  The solution is to scale into trades and out of trades to stay close to the market entry average price.
  3. Exit Price - It is important to maximize profits, but again, no one can exit the max tick from entry all the time. All markets turn, so we reduce our exposure by scaling out of trades as the market shows profits and sometimes losses.  We even will enter and exit additional contracts when the position average is less than the last current price. We call this Price Advantage model. 
  4. Take Your Ball and Go Home - Once you hit your objective, there is nothing wrong with stop trading and come back another day. The more time you are in a trade, the more risk that you will take.

Next-> 41. Act On Your Conviction Day Trading The Markets

Futures, Options on Futures and Forex trading involves a substantial degree of risk of loss and is not suitable for all individuals. An investor could lose the entire investment or, in some cases, more than the initial investment. Past performance is not necessarily indicative of future results.